What can Laws 22 and 25 achieve?

JAKARTA (JP): The Laws 22 and 25 were once touted as the B.J. Habibie administration's attempt at reform but scholars have identified political motives at the bottom of their establishment.

In May 1999, one month before the first ever democratic general elections after 1955, the Soeharto era House of Representatives passed and president Habibie signed Laws 22 and 25 on regional government, and financial relations between the central government and the regions respectively.

An observer, Herbert Feith, last year, speculated that Law 22 "had a lot of the spirit of the New Order about it" because the laws were promulgated, supposedly to bring the government closer to the people and empower the regional legislative bodies, but at the expense of the provinces. There are indications the central government was actually reluctant to devolve powers to the provinces, other observers have said.

Gone will be the old hierarchical system, whereby regency heads (bupati/walikota) were largely if not totally accountable to the central or provincial governments and could be removed by the governor or the minister of home affairs.

This is a break from the New Order system of government and may appear to be very much in the spirit of reformasi, which blames much of the corruption and nepotism of the Soeharto era on the very tightly centralized system where most key decisions affecting the entire country were taken by the president and a few ministers. Also, where regional officials were totally subordinate to the center.

"Just as the presidency should be weakened and parliament's power strengthened at the national level, so should regional parliaments have a much greater role in policy-making and implementation at the regional level," according to Anne Booth, a professor of economics at the London-based School of Oriental and African Studies (SOAS) and long-time observer of Indonesia.

But concerns have been raised on the impact of the supposed enhancement of the budgets of the regencies, to the roles of the provinces and possibly subregency levels of government.

There is a feeling the laws are designed to "dis-empower" the provinces and that the central government may still even be reluctant to really empower the regencies--which is why Feith suspected a New Order spirit behind the laws.

Will the regencies be able to cope with their augmented responsibilities? What role would be given to the subregencies (kecamatan or desa)? Will the reforms reduce the very high dependency on central government grants which has characterized regional and local government finance in Indonesia for decades?

Will the resource-rich provinces such as Riau, Aceh and Irian Jaya be able to cope with their greatly increased revenues? And what will be the net effect of the reforms on the central government budget?

Scholars also agree that political and economical motivations were behind the hasty establishment and implementation of the laws.

"Both laws were adopted under former president Habibie who took pride in having pushed the adoption of a large number of laws in a short time, something most jurists would consider to be a recipe for disaster," according to legal expert Gary F. Bell of the National University of Singapore.

Debate

The first law was drafted by a small working group within the home affairs ministry then. The second law reflected a long process of debate between the ministry of finance and other government agencies, both at the central and regional levels, which had been continuing since the early 1980s.

"In the event, both laws contained dramatic new policy initiatives which even the most ardent proponents of reform would not have believed possible a year earlier," said Booth.

The main provisions of Law 22 on regional government are:

* The abolition of the hierarchical relationship between the central government, provinces (daerah tingkat satu) and regencies (daerah tingkat dua, kabupaten/kotamadya).

* Regional heads (kepala daerah) at both province and regency levels will be elected by the regional legislative body and will be accountable to the body rather than to what in the past have been regarded as higher levels of government. While governors will continue to represent the central government in the regions, regency heads (bupati/walikota) will no longer act as representatives of the central government and will only be accountable to the local parliament and local electorate.

* The central government will retain responsibility on international relations, defense, justice, monetary and fiscal affairs, and religious affairs. In addition, it will retain overall control over national economic planning, national administration, high technology and human resource development policies, and natural resource conservation.

* Regencies (daerah tingkat dua, kabupaten/kotamadya) will assume responsibility for the implementation of programs in the following sectors: public works, health, education and culture, agriculture, communications, industry and trade, investment, environmental and land use affairs, cooperatives and labor.

* Regions which cannot carry out the functions devolved to them could amalgamate with other regions; in addition, provinces might carry out functions which regencies are unable to perform.

The main provisions of Law 25 are:

* The existing central government grants to the regions (province, regency and village) from both the routine and the development budgets will be abolished.

* They will be replaced by "equalization grants" (dana perimbangan) which will comprise a general allocation (dana alokasi umum), a special allocation (dana alokasi khusus), receipts from land and building taxes (pajak bumi dan bangunan), land and building titles administration fees (Bea Perolehan Hak atas Tanah dan Bangunan), and a share of the revenue from natural resource exploitation.

* The general allocation will amount to at least 25 percent of central government domestic revenue as determined in the annual state budget (APBN). The provinces will retain ten percent of this allocation and the remaining 90 percent will go to the regions. There is however a provision for a change in this division if provinces are forced to take over some expenses from the regencies.

* The special allocation will be made from the central budget to elected regions based on their special development needs.

* Regions will receive 15 percent of revenue from oil exploitation carried out within their borders and 30 percent from natural gas exploitation. They will receive 80 percent of government revenue from mining (other than oil and gas), forestry and fisheries. The law does not clarify whether "region" in this context is the province or regency but only states that this remains to be determined in future regulations.

* Regions may, with the permission of the regional people's representatives, borrow domestically to finance a part of the budget (how much is not specified) but may only borrow from overseas sources through the central government.

* Regional heads will be responsible, in all financial matters, to regional parliaments which must approve budgets and receive full reports on budget implementation from the relevant officials. (swe)